That was more than enough to send Crystallex speculators into the after hours buying frenzy, at least until the Dow Jones article appeared, as it provided a clearer description of the events and comments as they transpired. According to Raul Gallegos of Dow Jones Newswires, Chavez did indeed say that "a mining industry nationalization is not contemplated in the constitutional reform," but then goes on to quote him as saying that no reform was needed as the Venezuelan government already had the power to nationalize the mining industry. Indeed, it is the same power that Venezuela exercised when it forced government majority ownership in oil industry in 2006.
In summary, there was no consideration of changes to the constitution to allow for nationalization as Venezuela already has the powers, but this in no way meant that Venezuela had ruled out nationalization. According to an official Venezuelan government press release, Chavez’s comments were even more contentious than the newswires had portrayed. According to Chavez, there would definitely be no more mining concessions granted. It is time for Venezuela to recover the natural reserves of the country, Chavez said, and that action has a two fold purpose as it “releases to the Venezuelan deposits from the hands of imperialism and the oligarchy (it commits)”, placing the "potential wealth in favor of the interests of the society.”
Moreover, Chavez confirmed the formation and operation of a new national mining company and went on to say that Venezuela could handle projects itself and that outside investment was not necessary. In regard to foreign investment capital, Chavez threatened that companies either respect the laws and regulations of Venezuela, that they pay taxes and respect the environment, or just go away and let Venezuela handle the development of the industry. What is more troubling for Crystallex shareholders is that Chavez singled out Las Cristinas as a government project that could, in fact, be facing some changes. Dow Jones reports that when discussing steel conglomerate Sidor, which Chavez had threatened to nationalize unless it agreed to renegotiate its relationship with Venezuela by increasing sales to the domestic market and at more favourable terms than it could get in international market, he said that he was also waiting for a report from his mining minister as to how to proceed with Las Cristinas.
As documented in previous articles, several Venezuelan politicians have said that Crystallex’s Mine Operating agreement [MOA] could be converted into a joint venture with Venezuela where the country would have majority control over the project but that no decicion had yet to be made. Chavez’s comments seem to indicate that as the fate of Las Cristinas would be up to him but leaves the listener wondering if that decision will be based upon the new proposed mining law or an arbitrary declaration from a President who has shown little regard for existing operating contracts. This could spell serious trouble for Crystallex not only because of the reduction in role and thus the comparative reduction claimed resources and reserves but also due to its outstanding debt obligations.
This may also explain why Bloomberg, when he got in touch with the elusive VP of Investor Relations Richard Marshall, had nothing to say. Chavez’s comments, after all, fly in the face of the public statements issued by Crystallex in press releases and media interviews as it tried to assure the North American markets that its contract to mine Las Cristinas was safe and binding and that no changes were being discussed. To be fair to Crystallex though, they do declare in their less widely read Annual Information Form that political instability could "result in the deprivation of contractual rights or the taking of property by nationalization, expropriation or other means without fair compensation.”